מימון

# Entrepreneur of the Week Amnon Bar
# Post 5

Financing is at the heart of the real estate investor's strategy. There are several financing options:
1. Taking an Israeli loan, converting money into a bank account in the USA.
2. Taking out an American mortgage while mortgaging the property purchased there. This option is somewhat limited to Israelis because only certain banks or financial institutions agree to lend to non-American investors, also at a higher interest rate than an American will pay and usually only for investment under an LLC. 30% equity is usually required.
3. Joining a quiet investor who wants someone else to do the “black work” for him when the investor brings in the money or most of it.
As Robert Kiyosaki taught us, investments are made with the money of others. Loans we take out will finance 70% of the cost of the home we purchase. The rent will pay off the loan, when the value of the property increases within a few years it will be possible to refinance. We will take out a mortgage of 70% of the new price of the house, we will repay the rest of the original mortgage and we will have enough money left to serve as equity for the next house, and so on. After about 15-20 years we can if we want to sell one house out of all those we have accumulated, and with the money received close the small balances of all the mortgages that will remain. The rent from all the other houses will now serve as an additional or even primary source of income and we will reach the final stop on the way to economic freedom when we will not really have to go to work unless we just want to. That's what I did.
Tax issues
An American and Israeli accountant should be consulted regarding tax returns in the United States and Israel. The information I write here is under limited warranty.
An Israeli pays income tax on income he generates worldwide. An Israeli who generates income in the United States must pay tax on that income. Since there is a double taxation treaty between the United States and Israel, no double tax will apply. In practice, tax reports in the United States must be submitted first and then a report in Israel that takes into account all the investor's income, both from work and from his investments.
Many of the expenses in the US unlike in Israel are recognized for tax, this fact improves the return that can be achieved in the bottom line. On the other hand there is a draconian inheritance tax in the US that needs to be taken into account, but there are ways to reduce it.
In the first stage, the investor must decide whether he is acting as an investor personally or under a limited company. There are pros and cons to each way. My wife and I work as independent investors. Now about 20 years after starting my business when I have accumulated enough assets that give me a respectable source of income, I opened an LLC (American Company Ltd.) for my children, transferred some of the house sale money I mentioned in one of the previous posts, and now they will start rolling like I did. It is also a way to reduce the estate tax for example. When you start acting at a young age in the way I described in the five posts, then you can eventually get far (very). The next post (number 6) will include a summary of the topic, more details for those who will be interested, and a little surprise.